366 days of gratitude

September 21, 2016

Today’s increase in Fonterra’s forecast payout was unexpected and has raised a couple of questions:

  • Given last year when an increase in the forecast price was proved to be premature and later reversed, wouldn’t it have been more prudent to wait to make sure the upward trend in demand for milk is going to continue?
  • Why make the announcement today, instead of waiting until tomorrow when the company will present its annual results?

The cynic in me thinks these are valid concerns but the optimist is hopeful that Fonterra learned from last year and its forecast will prove to be at worst accurate and might even be conservative.

Dairying has had a couple of tough seasons, the impacts of which have spread off-farm.

Today’s 50 cent lift in the forecast payment has provided more than a glimmer of light at the end of the tunnel and I’m grateful for that.


Word of the day

September 21, 2016

Abtruse – difficult to understand; obscure;  recondite; esoteric;  difficult to penetrate; incomprehensible .


9/15

September 21, 2016

Can you identify these cities from maps?

I got 9/15:

Middle of the road: well done, you’re not a complete embarrassment


Rural round-up

September 21, 2016

Improved dairy sector expectations see New Zealand farmer confidence surge higher:

Results at a Glance

· Overall confidence in the agricultural economy has improved considerably from the previous quarter

· Farmers’ expectations for their own business performance also improved, driven by sizeable improvement in expectations among dairy farmers

· While overall confidence was up among all sectors, sheep and beef farmers registered small decline in expectations of their own business performance

· Horticulturalists’ business performance expectations also fell, but remain at elevated levels

· Farm business investment intentions remained stable. . . 

Young role model inspires primary sector job seekers – Gerard Hutching:

Ellie Cranswick knew New Zealand was different to the United Kingdom the moment she saw drench being advertised on TV.

She noticed on arrival that there were a number of differences between the two agricultural industries, from the end markets, to the genetics, to systems used.

Originally from Dorset, 27-year-old Cranswick now has her red bands firmly grounded in New Zealand soil after five years in the country. . .

Changing agri-food perspectives – Keith Woodford:

When I was an undergraduate back in the 1960s – in some ways it seems just yesterday – the dominant agricultural paradigms were about farm production and management.  As students, we learned nothing about marketing. And when marketing did come in vogue in the following decades, the dominant perspective was that marketing was what happened at the end rather than the beginning of the agri-food chain.

To a considerable extent, that perspective of a value chain that starts with production still survives within our animal-based agricultural industries. In contrast, the plant-based industries have been more successful in making the transition to a consumer-led position. And that may well be why, in an evolving world, our horticultural industries are currently succeeding where our traditional pastoral industries are currently struggling.

Our three big plant industries that are leading the way are viticulture, kiwifruit and apples. And then there are some other such as cherries which are also making good progress, plus seed crops such as carrots. . . 

Hope wallaby tracks ‘isolated incident’ – Lynda van Kempen:

The spread of wallabies is a serious concern and the last thing Otago needs is another destructive animal pest, a regional council director says.

Otago Regional Council environmental monitoring and operations director Scott MacLean, commenting about wallaby tracks being found at Galloway, near Alexandra, recently, said the council was treating the sighting seriously.

“Given that at this stage, only wallaby sign was sighted, I would like to think, and certainly hope, that this is an isolated incident. . . 

$3.1m funding for climate change projects:

Primary Industries Ministers Nathan Guy and Jo Goodhew have welcomed $3.1 million in new funding for 13 climate change research projects in the agriculture and forestry sectors.

The grants were announced today by the Ministry for Primary Industries through the Sustainable Land Management and Climate Change (SLMACC) research programme.

“This funding plays an important part in helping our primary industries prepare for the future challenges of climate change,” says Mr Guy.

“$935,000 is being invested in three projects to analyse soil carbon on hill country farms and under irrigation systems. . . 

Mighty mite makes easy meal of Marlborough broom – Mike Watson:

A tiny insect with a big appetite is making short work of invasive scotch broom plants in dry areas around Marlborough.

The broom gall mite was released by the Marlborough District Council biosecurity team into an area south of Blenheim in 2011.

In the past five years, the biocontrol agent has been spread by wind to surrounding farmland on the Redwood Pass and Dashwood Pass. . . 

Using wood fuel is heating up:

With the continual growth in the use of wood fuel for heating the Bioenergy Association is increasing its support for wood fuelled heat plant operators and maintenance staff, helping plant owners improve the performance of their plant and encourage others to move from coal to wood fuel.

“The amount of wood fuel replacing coal is growing each year and we want to ensure heat plant operating and maintenance staff are well supported,” says the Association’s Executive Officer Brian Cox.

The Bioenergy Association is holding a forum for heat plant owners, operators and maintenance staff in Christchurch on 27 September. . . 

Image may contain: outdoor, text, nature and one or more people


GDT and Fonterra’s forecast payout up

September 21, 2016

The GlobalDairyTrade price index increased by 1.7% in this morning’s auction.

That was less than analysts and expected and whole milk was down .2%.

However, Fonterra is obviously confident that the upward trend in prices will continue and has increased its farm gate forecast milk price:

Fonterra Co-operative Group Limited today increased its 2016/17 forecast Farmgate Milk Price by 50 cents to $5.25 per kgMS.

When combined with the forecast earnings per share range for the 2017 financial year of 50 to 60 cents, the total payout available to farmers in the current season is forecast to be $5.75 to $5.85 before retentions.

Chairman John Wilson said that since the Co-operative last reviewed its forecast Milk Price in August, global milk supply has continued to reduce and demand has remained stable.

“Milk production in key dairying regions globally is reducing in response to low milk prices. Milk production in the EU for 2016 is beginning to flatten out and our New Zealand milk collection is currently more than 3 per cent lower than last season.

“While we have seen some improvement in GDT auction prices recently, the high NZD/USD exchange rate is offsetting some of these gains.

“There is still volatility in global dairy markets and we will continue to keep our forecast updated for our farmers over the coming months,” said Mr Wilson.

It’s only a forecast.

Farmers and sharemilkers will still be very cautious but it’s very welcome news for the industry, those who service and supply it and the wider economy.


Shanghai Maling goes where shareholders wouldn’t

September 21, 2016

Shanghai Maling’s application to purchase a 50 per cent interest in Silver Fern Farms has been approved.

Minister for Land Information Louise Upston, and Associate Minister for Finance Paula Bennett, the decision-making Ministers, are satisfied that the purchase would create substantial and identifiable benefit for New Zealand.

“The Overseas Investment Office recommended that we approve Shanghai Maling’s application because it meets the criteria set down in the Overseas Investment Act 2005,” Ms Upston says.

“We are satisfied that the investment will be of substantial and identifiable benefit to New Zealand, which is the test set out in the Act. The investment will put the company in a better financial position and allow it to increase its exports.

“New Zealand shareholders will continue to have 50 per cent ownership of Silver Fern Farms, while benefiting from the injection of funds from the new investor.”

Not surprisingly SFF has welcomed the decision:

The proposed investment is now unconditional and is set to complete on 4 January 2017, the first business day of the new financial year for the partnership.

Silver Fern Farms Chairman, Rob Hewett said the new partnership with Shanghai Maling creates a unique opportunity for Silver Fern Farms.

“Shanghai Maling’s financial investment will make Silver Fern Farms the financially strongest company in the New Zealand meat industry with the ability to confidently invest in our business.

“The partnership will help us accelerate our consumer focused plate to pasture strategy globally, and to grow sustainable value for our shareholders and farmer suppliers over time.

“It is very pleasing to now be at this point after nearly 12 months, and we look forward to the partnership getting underway in the new year.”

Shanghai Maling President Wei Ping Shen was pleased the partnership could now be completed. “We are very pleased with the regulatory approval for this partnership. It clears the way for us to move ahead with the partnership. New Zealand grass fed red meat is the best in the world and the Silver Fern Farms’ brand has the potential to become a leading red meat brand globally.”

Mr Hewett stated that after the investment completes the Co-operative will, as previously advised, pay a special dividend of 30c per share to all ordinary and rebate shares expected to be paid prior to 31 March 2017) and will commence the redemption of the remaining approximately $5m of Supplier Investment Shares outstanding.

 Federated Farmers says it’s a sensible decision for New Zealand:

New Zealand will enjoy benefits from the approval for Shanghai Maling Aquarius to acquire a 50 percent ownership stake in Silver Fern Farms.

Federated Farmers Meat & Fibre Chair Rick Powdrell says it’s a sensible decision for the country and aligns the company better to service the needs of global markets in a modern world.

“New Zealand farmer-shareholders will continue to own 50 percent of the co-operative and will enjoy the benefits of access to the growing Chinese market.

“This is exactly what the farmer-shareholders wanted, with a majority voting last month for the deal to be approved,” says Rick.

The decision has been met with the inevitable concerns over foreign ownership.

One of those was Winston Peters and Act leader David Seymour says the NZ First leader’s paranoia should be ignored:

Winston Peters’ call for intervention over the partial sale of a private company proves he is unfit to be in Government, says ACT Leader David Seymour.

“It’s disturbing that Winston Peters, who could potentially hold the balance of power after the election, would override the recommendation of the Overseas Investment Office and block the partial sale of a private company,” says Mr Seymour.

“Why does Winston think he knows better than the thousands of Kiwi shareholders who voted for this sale?

Seymour is right – this is a decision for the shareholders, not politicians nor anyone else who has no money at stake.

However, he is a wee bit confused about what’s been sold:

“What’s Winston so afraid of? Does he think the cows will literally get shipped off to China? That the land itself will disappear? He’s just stirring up more anti-Chinese sentiment for cheap political gain.

SFF is a meat processing company which owns processing plants and the land they sit on but it’s not a farm.

“Blocking this sale would have prevented an injection of cash into the New Zealand economy, and would send a message to businesses that private property rights are not respected in this country.”

The critics fail to see that the decision brings money into New Zealand and, as Powdrell and Seymour say, it is what shareholders voted for.

They either didn’t have the money, or didn’t want to invest it in the company which would be in dire straits without it.

Shanghai Maling is going where shareholders couldn’t or wouldn’t.

This leaves just Alliance Group as the only co-operative in the meat industry and those farmers who aren’t happy about the SFF-Shanghai Maling deal have the option of supplying the co-operative or any of the other companies, New Zealand-owned or not.

Details of the decision are at Land Information NZ


Quote of the day

September 21, 2016

I don’t consider myself a pessimist. I think of a pessimist as someone who is waiting for it to rain. And I feel soaked to the skin. – Leonard Cohen who celebrates his 82nd birthday today.

He also said:

Poetry is just the evidence of life. If your life is burning well, poetry is just the ash.

And:

Act the way you’d like to be and soon you’ll be the way you act.

And:

There is a crack in everything, that’s how the light gets in.


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